Stock options are a very popular device for companies to financially entice - and retain - employees, particularly in the technology sector.

They are used to reward executives by giving them the right to buy company shares in the future at a fixed price (known as an option), usually the price the shares stood at on the day when the option was issued.

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His paper was followed by a brief article in the Wall Street Journal in March 2006 which actually named some companies that had suspicious option grant dates.

The extent of the problem

Within a few months more than 120 companies had either begun their own investigations or were being investigated by US authorities including the Securities and Exchange Commission (SEC).

The affair has snowballed into the one of the widest US investigations of corporate wrongdoing.

Executives at Brocade Communications Systems and Comverse Technology have been charged with stock options fraud, and a host of managers have resigned, including bosses at online publisher CNet Networks and antivirus software firm McAfee.

Computer giant Apple Computer recently said it expected it to restate some of its financial statements in order to properly account for the expenses resulting from the backdated options it had awarded executives.